Abstract-In this paper, an algorithm based on the frequency domain feature extraction method is discussed for the detection of currency. This method efficiently utilizes the local spatial features in a currency image to recognize it. The entire system is pre-processed for the optimal and efficient implementation of two dimensional discrete wavelet transform (2D DWT) which is used to develop a currency recognition system. A set of coefficient statistical moments are then extracted from the approximate efficient matrix. The extracted features can be used for recognition, classification and retrieval of currency notes. The classification result will facilitate the recognition of fake currency mainly using serial number extraction by implementing OCR. It is found that the proposed method gives superior results.